Mousumi's Report: Indian economy faces a dual challenge of falling forex reserves and declining stock markets. According to the Reserve Bank of India (RBI) the country’s forex reserves dropped by $5.7 billion (Rs 50 thousand crore) as of January 3rd raising alarm among financial experts. With the Indian rupee hitting record lows and foreign investors withdrawing funds concerns over economic stability are mounting.

Forex Reserve Decline

India’s total forex reserves now stand at approximately Rs 55 lakh crore ($644.41 billion). The drop includes

- Gold Reserves: Increased by $824 million, reaching $67 billion.

- Special Drawing Rights (SDR): Decreased by $58 million, now at $17 million.

- International Monetary Fund (IMF) Reserves: Fell by $18 million to $4 million.

What Are Forex Reserves.?

Forex reserves are assets held by a country’s central bank, including foreign currency, gold, treasury bills and SDRs. These reserves stabilise the currency, meet international payment obligations and maintain market confidence.

Stock Market Impact

The Indian stock market has seen significant outflows with foreign investors withdrawing Rs 2,254.68 crore last Friday alone. In January total withdrawals have reached up to Rs 22,194 crore. The rupee has also hit record lows reflecting the strain on the economy.

Expert Reactions

According to the Former SBI Mutual Fund Equity Head Sandeep Sabharwal criticised the RBI’s past policies, he stating

- “India’s forex reserves are at a 10-month low, having dropped by $70 billion. Mismanagement of the dollar - rupee exchange rate has led to excessive reserve depletion.”

He pointed to the sale of forward dollars under previous RBI leadership as a key reason for the current economic strain.

Read More: Sealdah Mega Block Alert....! Local Trains Cancelled For 4 Days On Sealdah To Dankuni Line

What Lies Ahead.?

The declining forex reserves and market instability underline the need for careful economic management. Strengthening the rupee, regaining investor confidence and implementing prudent fiscal policies will be crucial for stabilising the economy.